You are given the information of firm A and B for their performance evaluation. Firm A B Sales 15 20 EAT 2 2 Total Assets 25 40 Stockholder's Equity 10 10

Suppose the industry average of net profit margin ratio, total asset turnover and equity multiplier is around 10%, 0.58 times and 2.5 respectively. (HINT: Similar to Ch3 End-of-Chapter Question Q5 discussed in Ch3 PPT slides 56~61) Question 5 Which firm appears to have problems? -Firm A has problems.

-Both of them have problems.

-None of them presents problems.

-Firm B has problems.